Audit gives Ocoee a clean opinion; commissioners press staff on water-billing write-offs and controls

An independent audit firm told the Ocoee City Commission on April 21 that it had issued an unmodified (clean) opinion on the city’s financial statements for the fiscal year ending Sept. 30, 2025, while flagging several items for follow-up and prompting commissioners to press staff about water-billing controls.

The audit partner from Bervis Gray & Company said the firm issued a clean opinion and found no material weaknesses or significant deficiencies in internal controls that rose to the level requiring a formal finding. The auditors also reported a clean compliance result for the city’s investment policy and a clean single-audit for federal and state awards, saying their testing did not identify material compliance issues.

The auditors highlighted several financial items in their presentation: the general fund experienced a negative change in fund balance, partly because the city transferred about $1,300,000 to the solid waste fund to help cover a long-standing deficit; fiduciary funds showed roughly a $13,800,000 increase—largely attributable to investment earnings; and ARPA funds had roughly $5,600,000 unspent as of Sept. 30, 2025, which staff was working to obligate before the federal deadline (noted by auditors) to expend those funds by Dec. 31, 2026.

“Issuing an unmodified opinion means, based on our procedures, we believe the financial statements are fairly presented in all material respects,” the audit partner said. He added that auditors review internal controls as part of risk assessment but do not issue an opinion on the city’s internal-control system as part of a standard financial audit.

Questions from commissioners focused on utilities accounts receivable (AR) and the timing of write-offs. One commissioner said the city recently recorded a roughly $500,000 write-off in water-billing AR and asked whether auditors had tested the internal controls that allowed aged receivables to accumulate. The audit partner said auditors examine management’s methodology for estimating allowances and perform predictive testing; audit adjustments are recommended if differences exceed materiality thresholds, but estimates are often accepted where management’s approach is reasonable and not materially misstated.

Director Weber explained that bad-debt expense for utility funds is recorded in the financial statements and that the official write-off of individual accounts is performed in the utility billing system. Weber said the accounting records show the bad-debt amounts recorded in the general ledger and that the auditors reviewed those entries.

City management also told the commission it has already undertaken supplemental reviews. The city manager said the city has commissioned independent operational audits of several business units in the past 18 months—including fleet services (which returned clean results) and a separate, third-party review of water billing and controls that identified issues the city has taken steps to address. The manager said the city expects to bring related budget amendments and follow-up actions to the commission.

Commissioners pushed for clarity on whether an expanded operational audit—outside the normal scope of the financial audit—would be appropriate to test controls more directly and suggested budgeting for warrant and traffic studies in other agenda items; auditors said that kind of work is a separate engagement with a different scope.

The audit presentation and the commission’s discussion did not produce a finding that would require corrective action under the audit reports presented that night; commissioners directed staff to continue follow-up, share any independent-audit reports with the commission, and monitor the remaining AR balances.

What’s next: staff said it will provide additional information about the water-billing review and any operational-audit scope for the commission to consider in coming weeks.